Pres. Ma makes case for trade pact with China

Taiwan’s President Ma Ying-jeou held a press conference on February 9th to explain the reasoning behind his administration's policies concerning the negotiation of the Economic Cooperation Framework Agreement (ECFA) with China. He said the pact would include measures focusing on tariff reductions and exemptions as well as legal protection of investment and intellectual property rights. The overall aim is to boost Taiwan's competitiveness.

President Ma expressed his worry that Taiwan’s competitiveness will be adversely affected by free trade agreements (FTA) between the members of the Association of Southeast Asian Nations (ASEAN) and China, which from January this year reduced customs duties on 90 percent of trade between some of the countries.

In order not to be left behind, Taiwan needs an ECFA with China, according to Ma. There has been huge change in Asia over the last decade. In 2000, there were only three FTAs signed in the region, but by 2009 the number had increased to 58. Only Taiwan and North Korea are yet to sign an FTA.

Three key issues to ECFA

An ECFA with China would stimulate foreign direct investment in Taiwan and assure that the island is not marginalized in the region. An ECFA should also help create more job opportunities for Taiwanese people by addressing tariff reductions, the protection of investment and intellectual property rights.

First is the matter of tariff reductions and exemptions. In 2008, bilateral trade reached over US$130 billion, with Taiwan exporting US$100 billion-worth of goods to China and importing US$32.5 billion from the mainland. With low or zero tariffs, Taiwan would benefit from increased export volumes.

Second is the need for investment protection. An estimated 100,000 Taiwanese businesses have invested in China, with the total investment topping US$80 billion. Taiwan needs a comprehensive set of measures to safeguard the island’s business interests when they encounter unfair or unjust treatment in China.

Third is the protection of Taiwanese intellectual property rights, including trade marks, patents, and special processing and innovations. Through arrangements under an ECFA, Taiwanese firms would be able to avoid becoming the victims of Chinese pirating.

President responds to public concerns

In addressing concerns that an ECFA might hurt certain domestic industries, Ma said that the government has formulated three types of assistance program to help offset the impact. "Rejuvenation" assistance is aimed at helping industries that are at risk but have not yet been hurt. "Systematic adjustment" assistance is aimed at improving the operations of industries that have begun to suffer, though not as heavily. In the case of industries experiencing severe setbacks, a "damage relief" program administered by the Ministry of Economic Affairs will provide assistance up to NT$95 billion (about US$3 billion) over a 10-year period.

In response to concerns that Taiwan will allow mainland labor and agricultural imports, the president underscored the fact that agreements under the World Trade Organization framework do not address movements of labor, and it will not be included in these cross-strait negotiations.

As for agricultural products, he pointed out, whereas the previous Democratic Progressive Party (DPP) administration had lifted restrictions on the import of 1,415 types of mainland products, his administration has not lifted restrictions on even a single additional category of agricultural goods.

As for the DPP’s suspicions that China harbors political designs to use economic agreements to make Taiwan more dependent, President Ma said the surging growth of Taiwan's trade with China and investment there is normal. It is in keeping with China’s place as a factory to the world and its ballooning worldwide trade.

Talk on ECFA gains momentum

According to the Central News Agency, Premier Wu Den-yih said on March 6th that Taiwan and China hope to sign ECFA in May or June, depending on the progress of the negotiations. Both sides will have to negotiate on their “early harvest” lists, which refer to the industries and services on both sides that will be granted immediate tariff concessions or more liberal trade terms under the ECFA, Wu noted.

Momentum seems to be building on China’s side for the negotiation to be concluded, following the first round of talks that was held in late January. The second round of ECFA talks is slated for late March in Taipei.